TD-SCDMA: China's 3G
Already long-delayed, there is still however, the trial of China’s own brand of 3G technology, TD-SCDMA, to be conducted. Once this is over, it then remains for analysts to predict a date for roll-out. One such analysis comes from Deutsche Bank: “3G licences are likely at some point in 2007, and our best guess at the moment is the second quarter.” This prediction of 2Q07 comes from a research document recently issued by the bank.
Some of the more cautious observers of Chinese telecoms firmly believe that the delay in 3G rollout is because the Chinese Government is keen to protect the local technology. A local technology also means no royalties to foreign companies, with corresponding higher prices.
Of course, 3G is not there solely for the customer. Manufacturers may indeed benefit greatly from the demand for handsets and accessories. What is more, the Chinese manufacturers may benefit further if “Chinese 3G” (TD-SCDMA) is adopted and a whole range of locally-produced equipment is instantly available.
A second set of predictions, from Norson Telecom Consulting, is highly optimistic. The five million subscribers that Norson forecasts to sign up for 3G this year will turn into around 85 million around the end of 2009. The forecast is given further credence by the fact that Norson is based in Beijing. Somewhat more pessimistic - because it concentrates on 2007 and 2008 rather than 2009 - is the set of predictions from China Galaxy Securities. This organisation sees little happening in investment terms before the end of 2007, which is understandable. Next year, however, will witness major infrastructure build-up. Some 42% of investment in telecoms next year will be related to 3G, in rough terms US$2 billion out of US$5 billion.
When will TD-SCDMA stand trial?
It is clear that TD-SCDMA lags behind its competitors in not having undergone trials, much to the chagrin of the foreign ventures which have. The Chinese government‘s decision to hold back can not have endeared it to the overseas manufacturers but the latter are not in a position to do anything but wait for the results of the trial to be me made public. It’s Beijing ’s ball and they will play with it whenever they want to. And Beijing paying for, i.e. subsidising the equipment to be used in a trial expected to involve 2 million Chinese in five Chinese cities is also on the cards.
What will 3G be used for?
Nokia has recently (March-November last year) conducted a survey of third-party applications in Chinese mobile traffic, as employed by Nokia S60 users. Such uses made up around 40% of total mobile network traffic. Key forms of such applications were multimedia, infotainment and messaging. Over half the users (55%) chose to add third-party applications.
The games market is highly attractive - more than 400 games were played by the 1,000 subscribers being surveyed. Step forward Bounce, Agent V, RallyPro Contest and Snake. Downloading patterns to obtain the games are also of interest, comprising normal download from a computer, from a Bluetooth-enabled device and an operator portal.
The most popular ways to obtain these third-party applications are via download from a computer, from an operator portal via the device, and from another Bluetooth technology-enabled phone. In the case of multimedia, there was an almost unanimous decision to send photographs (85% of incidences) when sending mobile multimedia messages with attachments.
3G in other markets
China can learn a great deal from other Asia-Pacific countries that have introduced 3G. Japan for example, despite her apparent saturation, has found that more than 50% of her mobile subscribers have installed 3G technology onto their mobiles. South Korea has also reported success. 3G is in turn expected to provide a revenue boost for China. And once the local 3G market has been mastered there is the choice of moving into either emerging or established markets, or both.
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